Texas Administrative Code
Title 34 - PUBLIC FINANCE
Part 3 - TEACHER RETIREMENT SYSTEM OF TEXAS
Chapter 25 - MEMBERSHIP CREDIT
Subchapter B - COMPENSATION
Section 25.26 - Annual Compensation Creditable for Benefit Calculation

Universal Citation: 34 TX Admin Code ยง 25.26

Current through Reg. 49, No. 38; September 20, 2024

(a) Except as provided in subsections (b), (g) and (h) of this section, for the purpose of computing the amount of a retirement benefit or a death benefit under § 824.402, Government Code, annual compensation means creditable compensation for service paid to a member of the retirement system during a 12-month period beginning September 1 and ending August 31 of the next calendar year for service rendered during no more than a 12-month period.

(b) For the purpose of computing the amount of a retirement benefit or a death benefit under § 824.402, Government Code, for retirements or deaths before April 1, 2015, annual compensation paid prior to September 1, 2012 is the greater of:

(1) the amount of creditable compensation for service paid to a member of the retirement system during a 12-month school year as defined in § 25.133(a) of this title (relating to School Year); or

(2) the amount of creditable compensation paid to the member during a 12-month period beginning September 1 and ending August 31 of the next calendar year.

(c) Unless otherwise provided by law or this chapter, a member shall receive credit only for annual compensation actually received.

(d) Compensation from which deductions for an Optional Retirement Program annuity were made shall not be included in annual compensation for benefit calculation purposes.

(e) If an employer changes their payroll reporting to comply with § 25.28(c) of this title (relating to Payroll Report Dates) and, as a result of this payroll reporting change, a member has only 11 months of salary credited by TRS in a school year, then TRS will attribute an additional month of salary for purposes of benefit calculation if that school year of compensation would have been used in calculating the member's highest average salary for benefit calculation purposes. The amount of compensation that TRS will attribute for the additional month is equal to the amount that would have been reported for the month that was excluded as a result of the payroll reporting change.

(f) For the purpose of computing the amount of retirement benefit or a death benefit under § 824.402, Government Code, for retirements or deaths after March 31, 2015, annual compensation shall be calculated as follows:

(1) for the 2013-2014 school year and thereafter, annual compensation is the amount of creditable compensation for service paid to a member of the retirement system during a 12-month period beginning September 1 and ending August 31 of the next calendar year;

(2) for the 2012-2013 school year, annual compensation is the greater of:
(A) the amount of creditable compensation for service paid to a member of the retirement system during the 12-month school year as defined in § 25.133(a) of this title (relating to School Year); or

(B) the amount of creditable compensation paid to the member during a 12-month period beginning September 1, 2012 and ending August 31, 2013.

(3) for school years prior to the 2012-2013 school year annual compensation shall be the amount of creditable compensation for service paid to a member of the retirement system during the 12-month school year as defined in § 25.133(a) of this title (relating to School Year).

(g) Effective with the 2015-2016 school year, annual compensation for the school year in which the member retires is the highest total of compensation received during a 12 consecutive month period that occurs during a 14 consecutive month period provided:

(1) the member completes the full contract period for the final year;

(2) the 14 consecutive month period includes the months of September through August of the school year in which the member retires;

(3) the 14 consecutive month period does not include months prior to the month in which the member's contract for the final year began;

(4) the annual compensation under this subsection does not include compensation earned after retirement, except that as provided in § 25.24(e) of this title (relating to Performance Pay), creditable annual compensation earned by the date of retirement but not yet paid at the date of retirement is included in the annual compensation for that year;

(5) the annual compensation under this subsection does not include performance pay credited by TRS as annual compensation in a prior school year;

(6) the annual compensation for the school year in which the member retires is subject to all applicable Internal Revenue Code limits for that school year;

(7) the member does not receive credit for more than 12 months of compensation in the annual compensation for the final school year; and

(8) the member's compensation in the final year before retirement is not paid out in fewer than 12 months.

(h) If due to an error of the employer, compensation earned by the retiree in the final school year before retirement is not paid and/or not reported before the first annuity payment is issued, upon notice to TRS and the submission of all required corrected reports and member and employer contributions on the compensation, TRS shall adjust its records. If the additional compensation results in increased benefits payable on behalf of the retiree, the adjusted benefit shall be paid beginning in the month TRS receives the additional contributions and the corrected reports. In no event may an error be corrected under this subsection after the end of the school year following the school year in which the member retired.

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